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Eight Reasons Why Extending Unemployment Benefits Will Boost the Economy


Eight Reasons Why Extending Unemployment Benefits Will Boost the Economy


Unemployment insurance will keep families — and our economy — afloat.

In the aftermath of the super committee’s collapse, Democrats are going to have to fight to get unemployment insurance benefits extended. This is one of many “orphan programs” left behind that are set to expire at the end of the year. Since it looks like there is going to be a debate over whether or not to extend the benefits, what can we say with certainty about the costs and benefits of extending unemployment benefits?

1. Even considering the cost, unemployment benefits are a deal. Extending unemployment benefits would cost around $44 billion for one year. (Source: CBO.) Specifically, “CBO estimates…$44.1 billion would stem from the one-year extension of EUC and EB provisions. That extension would allow people who exhaust their regular unemployment compensation during calendar year 2012 to receive up to 53 weeks of EUC, and would make it easier for states to provide up to an additional 20 weeks of benefits under EB (depending on the states’ laws and unemployment rates).” Given that interest rates are so low, and real interest rates are even negative, this is a great value.


  1. cemab4y November 23, 2011

    It is a good idea. let’s help our unemployed.

  2. Dik November 23, 2011

    Mr. Konezal;

    You get what you pay for. If you pay people to be unemployed you will get more unemployed people. The society loses the productivity, which is the true generator of wealth, which these people will provide if they are kept from accepting work because they can make more in unemployment. They become wealth consumers, living off the backs of workers, rather than contributors.

    Dik Thurston
    Colorado Springs

  3. ljorgensen November 23, 2011

    Back when I was in college economics included a discussion of the velocity of a dollar injected into the economy in the form of government spending and a tax cut. Velocity is the number of times that dollar is spent and respent. The tax cut had a velocity of 3 while a spent dollar’s velocity was 7. This means that far greater economic stimulous can be gained by spending money that results in jobs such as public works projects, infrastructure and the like. While the unemployed need to be supported, we should primarily spend money to stimulate economic expansion. Private industry will not spend a tax cut to create jobs until demand for their product or service requires it. They have no incentive to do so if continual tax cuts steadily improve their profitability. Therefor increasing their tax burden together with tax incentives for new business initives that create jobs becomes the only way to get them to spend the mountains of cash they are currently sitting on.

  4. marescho November 23, 2011

    I would be more in favor of unemployment benefits if they went to everyone out of work. They don’t and many unemployed can’t get them. Instead, I would like to see work programs sponsored by the government like the WPA. If people are getting supported, why not get something done, and they could be more fair, with all unemployed having an equal chance to get them.


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